HomeMy WebLinkAbout05 ENA WITH THE IRVINE COMPANY LLC FOR PORTIONS OF TUSTIN LEGACY 2B, 2C AND 8DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
MEETING DATE:
TO:
FROM:
SUBJECT:
SUMMARY:
Agenda Item os
Reviewed: nB
City Manager
Finance Director
MAY 21, 2024
NICOLE BERNARD, ACTING CITY MANAGER
ECONOMIC DEVELOPMENT DEPARTMENT
EXCLUSIVE NEGOTIATING AGREEMENT WITH THE IRVINE
COMPANY LLC FOR PORTIONS OF TUSTIN LEGACY
DISPOSITION AREAS 2B, 2C AND 8
Request for authorization to enter into an Exclusive Negotiating Agreement (ENA) with
The Irvine Company LLC (Developer) for the disposition and development of portions of
Disposition Areas 2B, 2C and 8 at Tustin Legacy for a multifamily residential project.
RECOMMENDATION:
Authorize the City Manager to execute the ENA between the City and Developer.
FISCAL IMPACT:
Concurrent with the execution of the ENA, Developer will submit a good faith deposit of
$150,000 to be applied toward staff and third -party costs incurred by the City including
the retention of legal counsel associated with the negotiation. These costs are separate
from entitlement expenses that will be borne by Developer. Staff will negotiate the terms
and conditions under which the property will be sold including the purchase price. If
negotiations are successful, staff will present to the City Council a Disposition and
Development Agreement (DDA) for consideration.
BACKGROUND:
Competitive RFP
On September 14, 2021, the City initiated an RFP process through a competitive
solicitation utilizing its broker CBRE. Proposals were requested from residential
developers and all entities identified in California Government Code Section 54222(a) for
a multifamily mixed -use residential community with respect to approximately 19.4 acres
of land located within portions of Disposition Areas 2B, 2C and 8 bounded by Legacy
Road to the east, Tustin Ranch Road to the south, Compass Avenue to the west and
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Agenda Report — Irvine Company
May 21, 2024
Page 2
Warner Avenue to the north. The disposition parcels are located within Tustin Legacy
Specific Plan Neighborhood D and more specifically within Planning Areas 13 and 14.
Consistent with the Surplus Land Act (SLA) and the California Department of Housing
and Community Development (HCD) SLA Guidelines, the RFP required that twenty-five
percent (25%) of the total number of units be reserved for lower income households. The
RFP 25% affordability requirement is tied to an exemption within the SLA that required a
competitive RFP with all HCD Housing Sponsors being invited to participate, and also
requires the site be larger than one (1) acre, have more than 300 units, and be "mixed -
use." In the time since the release of the RFP, new legislation (AB 480 and SB 747)
effective January 1, 2024, amended the SLA so that the exemption no longer requires a
mixed -use component for the SLA exemption described above.
Developer submitted a proposal to the RFP under the competitive solicitation, but was
not initially selected for negotiations. Exclusive negotiations for the subject project
between the City and another developer concluded on July 31, 2023. Subsequently,
CBRE solicited updated proposals from the next most qualified responding developers
participating in the RFP process. Staff recommends entering into an ENA with Developer
based on Developer's extensive experience in both developing and managing high quality
apartment communities within Orange County and throughout California as well as their
experience in partnering with affordable housing developers.
DISCUSSION:
The ENA defines the rights and responsibilities of the City and the Developer each in the
desire to negotiate the development transaction. If the terms and conditions of the
transaction are agreed upon and executed, the City will convey the property to Developer
for purposes of developing the market rate portion and guaranteeing the development of
the affordable housing portion in partnership with an affordable housing developer.
Developer proposes to develop the property with approximately 1,208 multifamily
residential units with 25% of the units reserved for households of lower incomes. Recent
changes to state law under AB 1287 (Alvarez), effective January 1, 2024, amended State
Density Bonus Law to allow a "stackable" or second density bonus for projects achieving
the maximum density bonus. This could allow additional residential units within the project
depending on the various levels of lower income affordability to be provided. Project
phasing, affordability levels, and the ultimate number of residential units will be
determined in the ENA process.
As proposed, the development will provide much needed market rate and affordable
housing for the City and region. The development will also finish the Legacy Road edge
of Neighborhood D South and provide publicly accessible paseos for access through the
site to and from other nearby projects.
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Agenda Report — Irvine Company
May 21, 2024
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The ENA provides for an initial negotiating period of one hundred and fifty (150) days
from the Effective Date which may be extended for two (2) additional periods of thirty (30)
days at the discretion of the City Manager. If negotiations are successful, the project
entitlements will be reviewed by the Planning Commission and the Disposition and
Development Agreement (DDA) and project entitlements will be brought to the City
Council for consideration.
Ryan 4wiontek
Acting Deputy Director of Economic Development
Attachment: ENA between the City of Tustin and The Irvine Company LLC
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EXCLUSIVE NEGOTIATING AGREEMENT
(TUSTIN LEGACY PORTION OF DISPOSITION AREAS 2B, 2C AND 8)
THIS EXCLUSIVE NEGOTIATING AGREEMENT (TUSTIN LEGACY
PORTION OF DISPOSITION AREAS 2B, 2C AND 8) ("ENA") is made as of ,
2024 ("Effective Date") by and between the CITY OF TUSTIN (the "City") and The Irvine
Company LLC, a Delaware limited liability company ("Developer"), with respect to certain land
referred to herein as the "Development Parcels" (defined below). The City and Developer hereby
agree as follows:
1. Introduction.
1.1 Pursuant to the Defense Base Closure and Realignment Act of 1990, (Part A of
Title XXXIX of Public Law 101-510; 10 U.S.C. Section 2687 Note), as amended, the federal
government determined to close the Marine Corps Air Station -Tustin ("MCAS Tustin") located
substantially in the City of Tustin. In 1992, the City was designated as the Lead Agency or Local
Redevelopment Authority for preparation of a reuse plan for MCAS Tustin in order to facilitate
the closure of MCAS Tustin and its reuse in furtherance of the economic development of the City
and surrounding region. The MCAS Tustin Reuse Plan developed in accordance with this
procedure was adopted by the City Council of the City of Tustin (the "City Council") on October
17, 1996 and amended in September, 1998 (the "Reuse Plan").
1.2 A Final Joint Environmental Impact Statement/Environmental Impact Report for
the Disposal and Reuse of MCAS Tustin and Mitigation Monitoring and Reporting Program for
the Final EIS/EIR were adopted by the City on January 16, 2001. In March 2001, a record of
decision was issued by the Department of the Navy (hereinafter, "Navy") approving the Final
EIS/EIR and the Reuse Plan with several subsequent supplements and addenda approved by the
City (the original EIS/EIR, as so amended, the "Final EIS/EIR").
1.3 In May 2002, the Navy approved an "Economic Development Conveyance of
Property at MCAS Tustin" and agreed to convey approximately 1,153 acres of MCAS Tustin to
the City. On May 13, 2002, approximately 977 acres, including the Development Parcels which
are the subject of this ENA, were conveyed by the Navy to the City by quitclaim deeds, in
accordance with the provisions of that certain Memorandum of Agreement by and between The
United States of America (through the Secretary of the Army or designee) and the City dated May
13, 2002 ("Memorandum of Agreement" or "MOA"). Additional acreage is currently under
ground lease by the City from the Navy and portions thereof have subsequently conveyed by the
Navy to the City pursuant to subsequent quitclaim deeds. The approximately 1,153 acres of MCAS
Tustin located within the City of Tustin and either conveyed by the Navy to the City or subject to
ground lease between the Navy and the City are referred to in this ENA as "Tustin Legacy".
1.4 On February 3, 2003, the City adopted an ordinance approving the MCAS Tustin
Specific Plan/Reuse Plan setting forth the zoning and entitlement framework for future
development of Tustin Legacy. Since its initial adoption, the City has approved numerous Specific
Plan amendments. All references in this ENA to the "Specific Plan" shall be deemed to refer to
the Tustin Legacy Specific Plan/Reuse Plan, as the same may have been previously or may be
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subsequently amended. The Specific Plan conforms to and implements the Reuse Plan and the
City's General Plan.
1.5 The City desires to effectuate development of Tustin Legacy through the sale and
development of property in accordance with applicable federal and local requirements. Tustin
Legacy shall be developed in accordance with all City requirements, including, without limitation,
the Reuse Plan and the Specific Plan.
1.6 On September 15, 2021, the City initiated a competitive RFP process through a
solicitation requesting proposals from residential developers and all entities identified in California
Govt. Code ("Govt. Code") Section 54222(a) seeking development of a multi -family mixed use
residential community with respect to approximately 19.4 acres of land located within portions of
Disposition Areas 2B, 2C and 8 and bounded by Compass Avenue, Warner Avenue, Tustin Ranch
Road and Legacy Road, as depicted on the site map attached as Exhibit A to this ENA. The land
depicted on Exhibit A is referred to herein as the "Development Parcels".
1.7 Developer submitted a proposal for purchase and development of the Development
Parcels in response to the RFP process. After consideration of the various responses to the RFP,
and negotiations with a selected respondent that were unsuccessful, the City has reevaluated the
proposals received and desires to enter into this ENA with Developer for a multi -family residential
community with respect to the Development Parcels.
1.8 Consistent with the requirements of Govt. Code Sections 54220-54234 ("Surplus
Land Act") and the California Department of Housing and Community Development ("HCD"),
issued Surplus Land Act Guidelines ("Guidelines", and collectively and as the same may be
amended from time to time with the Surplus Land Act, the "SLA Regulations"), twenty five
percent (25%) of the total number of units must be reserved for lower income households, as
defined in California Health and Safety Code Section 50079.5 at an affordable rent pursuant to
California Health and Safety Code Section 50053 ("Affordable Housing Units"). Developer
recognizes that the timing of construction of the market rate units and Affordable Housing Units
may be subject to regulation under the SLA Regulations.
1.9 The City is required by law to comply with the SLA Regulations with respect to
the Project, including by determining that the Project meets the requirements of the Surplus Land
Act exemption granted to local agencies in Govt. Code Section 54221(f)(1)(H). Developer
acknowledges that it is responsible to investigate the requirements of the SLA Regulations,
including but not limited to the requirement in the Surplus Land Act that the City cause recording
at the initial close of escrow pursuant to the DDA of a restrictive covenant requiring that twenty
five percent (25%) of the total number of units on the Development Parcels shall be Affordable
Housing Units ("SLA Covenant") that shall run with the Development Parcels for fifty-five (55)
years and shall be enforceable against any owner who violates the SLA Covenant (and each
successor in interest who continues the violation) by the entities authorized to bring action under
the SLA Regulations.
1.10 Consistent with the SLA Regulations, Developer proposed purchase and
development on the Development Parcels as a residential development containing approximately
1,208 multi -family residential units, including 302 Affordable Housing Units, together with
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required on -site infrastructure and a complete accompanying set of high quality amenities to be
constructed by Developer, including common open space, with a portion of such open space to be
made accessible to the public pursuant to a recorded easement. The proposed development of the
Development Parcels described above and as further described in this ENA is referred to herein as
the "Project".
1.11 The Development Parcels comprise a portion of the land conveyed by the Navy to
the City in Navy Quitclaim Deed D dated May 13, 2002 and recorded in the Orange County Clerk
Recorder Office on May 14, 2002 as Instrument No. 20020404594 ("Navy Quitclaim Deed").
The Development Parcels are in Specific Plan Neighborhood D, Planning Areas 13 and 14 and are
referred to in the Navy Reuse Plan as portions of Parcels 8, 14, and 40 and in the Navy Quitclaim
Deed as portions of Parcels I-D-3 and I-D-4. The Development Parcels are bounded by Warner
Avenue, Legacy Road, Compass Avenue and Tustin Ranch Road.
1.12 Developer intends to assign the development of the Affordable Housing Units to
an entity that constructs and operates affordable housing in the State of California and approved
by the City in accordance with this ENA ("Affordable Housing Developer") to facilitate the
negotiations, to assure that only one applicant requests the density bonus and to provide a single
point of contact for negotiation of the DDA and the DA, Developer shall be the sole party
conducting negotiations with the City and no Affordable Housing Developer shall have rights
under this ENA.
1.13 The City and Developer desire, for the ENA Negotiating Period (as defined below),
to negotiate diligently and in good faith, the terms and conditions of a disposition and development
agreement ("DDA") and development agreement ("DA") which if agreed upon and executed will
specify the rights and obligations of the City and Developer with respect to the sale of the
development Parcels and the design and development of the Project by Developer.
1.14 Nothing herein shall preclude the City from negotiating with other entities for other
developments on other portions of Tustin Legacy or other City owned properties that are not the
subject of this ENA.
2. Agreement to Negotiate.
2.1 Good Faith Negotiations. The City and Developer agree for the ENA Negotiating
Period to exclusively negotiate with one another diligently and in good faith to prepare the DDA,
DA and other Transaction Documents to be entered into between the City and Developer with
respect to the purchase and sale of the Development Parcels and development of the Project on the
terms set forth in this ENA.
2.2 Ri2hts and Responsibilities of Developer. The City and Developer each desire to
negotiate a DDA and DA which if agreed upon and executed, shall set forth the terms and
conditions pursuant to which the Development Parcels shall be conveyed by the City to Developer
and developed by Developer. It is the intent of the parties with respect to negotiation of the DDA
and DA that Developer (a) bear responsibility for design, development, construction and operation
of the Project as a whole and that it cause guaranties for such development as may be required by
the City in the Transaction Documents to be provided, and (b) be the "Developer" (as such term
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will be defined in the DDA and DA) for the Project with the right to contract with or delegate to
Affordable Housing Developer the financing, design, construction and operation of the Affordable
Housing Units (but retaining the right and duty to enforce such assigned or delegated duties) and
(c) if applicable, upon satisfaction of the conditions precedent thereto in the DDA and DA, to
convey the real property required for construction of the Affordable Housing Units to an
Affordable Housing Developer approved by the City. Developer shall have the right and the
obligation to assign its right to acquire and to carry out the vertical construction of the Affordable
Housing Units to an Affordable Housing Developer approved by the City in its sole discretion. If
Developer intends to have the Affordable Housing Units constructed by an Affordable Housing
Developer, Developer shall identify the Affordable Housing Developer and its controlling person
within sixty (60) days following the Effective Date and shall concurrently with identification of
the Affordable Housing Developer provide the City with the information described in Sections
6.2.2 and 6.3.1 with respect to the proposed entity.
2.3 DDA and DA. Notwithstanding that the terms of the purchase and sale and
development of the Development Parcels are to be negotiated, Developer and the City have agreed
that the transactional documents to be negotiated to describe the transaction shall be in the form of
a DDA and DA.
2.4 ENA Not a Final Agreement. This Agreement (including all exhibits hereto) is
solely an exclusive right to negotiate and is not a final agreement. The City and Developer do not
intend this agreement to be a purchase, option or similar contract or to be bound in any way by
this ENA other than to facilitate negotiation of the transaction and to establish a period of exclusive
negotiations during which time each of the City and Developer shall negotiate with the other in
good faith. The City shall not market the Development Parcels to other interested parties and
Developer hereby agrees that it shall not withdraw any offer made by it pursuant to Section 4.2.5.
2.5 Essential Terms Not Agreed. City and Developer acknowledge that although the
parties have set forth a framework for negotiation of essential terms of any transaction they have
not herein agreed upon essential and material terms of a transaction, including, e.g., price, terms,
timing of transfer of the Development Parcels, the conditions precedent to conveyance or the
requirements related to development of the Project (collectively, the "Essential Terms"), each of
which are an essential component of the transaction and shall be the subject matter of their further
negotiations. This ENA is merely an agreement to enter into the ENA Negotiating Period
according to the concepts presented herein, reserving final discretion and approval of any of the
DDA and DA by the City to the City Council and by Developer to its authorized representatives.
The Essential Terms shall be set forth, if at all, in a DDA and DA, in each case, approved and
executed by each of the City and Developer and with additional agreements, if any, between
Developer and an Affordable Housing Developer, required and approved by the City in its sole
discretion, governing the rights and responsibilities of the Affordable Housing Developer with
respect to acquisition and vertical construction of the Affordable Housing Units (collectively,
"Transaction Documents").
2.6 Effectiveness of Subsequent Agreements. The DDA and the DA shall not exist
and shall not be binding unless and until each is fully executed by Developer and the City,
approved by counsel to each of the City and Developer as to form and approved by the City Council
of the City and by the managing members of Developer. The DDA and DA shall become effective
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only after and if the agreements have been considered and approved by the legislative body of the
City and the City Council of the City after noticed public hearing. Nothing in this Agreement shall
supersede or waive any discretionary or regulatory approvals required to be obtained from the City
pursuant to the municipal code of the City ("City Code") or the provisions of any applicable State
or Federal law or regulation.
2.7 Public Hearings and Compliance. If the negotiations hereunder culminate in
Developer and the City's negotiations concurring on the terms and provisions of a DDA and DA,
such DDA and DA will be considered for approval by the City only after all required public
hearings have been held and after compliance with all applicable laws and ordinances. The
concurrence of the City negotiators with the terms and provisions of a proposed DDA and DA
under any provisions of this ENA shall not be construed or interpreted as the City approving or
accepting such terms. Such concurrence shall be viewed as nothing more than the willingness of
the City negotiators to recommend to the legislative body of the City and the City Council that
they approve such terms.
2.8 Assumption of Risk. City and Developer each assume the risk that,
notwithstanding this Agreement and good faith negotiations, the City and Developer may not enter
into any agreement due to their failure to agree upon Essential Terms. Accordingly, neither party
will have any liability to the other in the event that the parties are unable to reach such a definitive
agreement with respect to the proposed transaction for any reason or no reason.
3. Developer's Representations. Warranties and Agreements.
Developer represents, warrants and agrees as follows:
3.1 Expertise and Financial Oualifications. Developer has the necessary expertise,
experience and financial capability to undertake development of the Project at the Development
Parcels as contemplated by this ENA and, in the event of an assignment of the obligations with
respect to development of the Affordable Housing Units, to oversee the development of such units
and to assure that the Affordable Housing Developer has the necessary expertise, experience and
financial capacity to undertake vertical development of the Affordable Housing Units as
contemplated by this ENA.
3.2 No Speculation in Land Holding. Developer's intended acquisition of the
Development Parcels and its other intended undertakings pursuant to this ENA shall be used for
the timely development of the Project upon the Development Parcels and accompanying
infrastructure and amenities and not for speculation in land holding.
3.3 Experience. Developer is experienced in development and understands the process
and requirements required to design, construct, develop and otherwise implement development
projects such as the Project described herein.
3.4 Project Financing. Except as set forth below with respect to financing for the
Affordable Housing Units, Developer is capable of acquiring the Development Parcels and
developing the Project without a capital partner or third party financing and intends to fund
development of the Project without a mortgage and without utilizing the Development Parcels as
collateral. With respect to the Affordable Housing Units only, Developer or Affordable Housing
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Developer intends to commit to the provision of long-term development financing for the
Affordable Housing Units from a potential reputable, institutional lender reasonably approved by
the City. At the initial close of escrow pursuant to the DDA, Developer shall cause one or more
guarantor(s) approved by the City in its sole discretion to provide the City with a performance and
completion guaranty for the Project.
3.5 Release. Except as specifically set forth in Section 4.4, Developer, on behalf of
itself and its successors and assigns, hereby waives the right to recover from and fully and
irrevocably releases the City, the Successor Agency to the Tustin Community Redevelopment
Agency, the Tustin Housing Authority, the Tustin Finance Authority, and their respective elected
and appointed officials, employees, agents, representatives, attorneys, affiliates, consultants,
contractors, successors and assigns ("City Parties") with respect to any and all (a) claims, actions,
causes of action, demands, orders, or other means of seeking or recovering losses, damages,
liabilities, costs, expenses (including, without limitation, attorneys' fees, consultant fees and court,
arbitration and litigation costs) or any other type of compensation that Developer may have or
incur ("Claims"): (a) pursuant to the process by which Developer was selected, the RFP selection
process, the RFP or any modification or defect thereto, or any information set forth in the RFP or
provided as part of the selection process or negotiation period; (b) with respect to the terms of this
ENA including, without limitation, the terms of this ENA or the termination of this ENA; (c) any
disputes, claims, actions, causes of action, demands or orders arising between Developer and any
affordable housing developer or any other third party; (d) a potential or declared violation of or
other requirements or proceedings under the SLA Regulations affecting or prohibiting the
disposition of the Development Parcels or a determination by the City not to proceed with the
transaction based on the foregoing; (e) the failure of the Parties or any of them to agree upon the
Essential Terms of the transaction contemplated by this ENA or the Transaction Documents; (f)
the failure of the City to approve an Affordable Housing Developer or any Transaction Document;
(g) any condition of the Development Parcels, or any current or future improvement thereon,
known or unknown, including, without limitation, the environmental condition of the
Development Parcels or the extent or effect of any grading of the Development Parcels; (h)
economic or legal conditions on or affecting the Project, the Development Parcels or the
improvements thereon; and/or (i) any actions of the City or the City Parties in connection with any
of the foregoing (including, without limitation, the exercise by the City of its discretion, decision,
or judgment with respect to the foregoing). This waiver and release includes without limitation, a
waiver and release with respect to (x) any and all damages and/or monetary relief (whether based
in contract or in tort), including, without limitation, any right to claim direct, compensatory,
reliance, special, indirect, consequential, expectation, anticipation, exemplary or punitive damages
or losses any right to specific performance or other injunctive relief, including without limitation,
for conveyance of or to claim any right of title or interest in the Development Parcels or any portion
thereof; (y) the right to protest the RFP and/or the terms or selection process pursuant to the RFP,
and (z) the failure of the City to negotiate in good faith pursuant to this Agreement or to enter into
a DDA and/or DA.
3.6 Survival of Provisions. The provisions of this Section 3 shall survive the
termination of this ENA.
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4. Negotiations.
4.1 Initial ENA Ne2otiatin2 Period; Due Diligence.
4.1.1 ENA Negotiating Period. The initial period of negotiations pursuant to
this ENA shall commence on the Effective Date and terminate upon the date that is one hundred
and fifty (150) calendar days from the Effective Date ("Initial ENA Negotiating Period"), subject
to extensions as provided in Section 4.2. The Initial ENA Negotiating Period, as the same may be
extended pursuant to Section 4.2.2 or earlier terminated pursuant to Section 4.2.6 is referred to
herein as the "ENA Negotiating Period". If at the expiration of the ENA Negotiating Period (or
within any extension of time mutually approved by the City and Developer in accordance with the
terms of this ENA), Developer has not, in accordance with Section 4.2.5, signed Transaction
Documents in form and substance prepared and approved by City staff, in its sole discretion, for
submittal to the City Council, then this ENA shall automatically terminate. During the Initial ENA
Negotiating Period, the City will prepare a draft of the DDA and DA and submit the draft
documents to Developer for review and comment.
4.1.2 Due Diligence Review. During the ENA Negotiating Period, Developer
shall have the right to undertake inspections and investigations to evaluate the physical
characteristics of the Development Parcels, the feasibility and advisability of its proposed
acquisition and development of the Development Parcels as well as such other matters as may be
deemed by Developer to be reasonably necessary to generally evaluate the Development Parcels
and determine the feasibility and advisability of the use of the Development Parcels for
development of the Project; provided that any physical inspection of the Development Parcels shall
be subject to the provisions of Section 4.5 of this ENA, including, without limitation, the License,
insurance and indemnity provisions set forth therein and the insurance requirements set forth in
Exhibit B to this ENA. Developer shall have the right during the ENA Negotiating Period and
prior to its execution of the DDA and DA pursuant to Section 4.2.5 to terminate this ENA at any
time in Developer's sole discretion, for any reason arising from the results of such inspection,
examination and other due diligence pursuant to Section 4.2.6(b) of this ENA. Developer
acknowledges and agrees that the ENA Negotiating Period provides it with adequate time to
complete its due diligence investigations. The determination by Developer to submit the DDA and
DA to the City for consideration pursuant to Section 4.2.5 shall constitute Developer's agreement
that it has completed its physical and environmental site inspections, title and survey, entitlements,
and all other inspections and investigations with respect to the Development Parcel, the Project
and the Transaction and that the DDA and DA shall provide no additional due diligence period.
4.2 Extensions of ENA Ne2otiatin2 Period; Offer Period; Termination of ENA.
4.2.1 Extensions in Writing. No extension of the ENA Negotiating Period
shall be effective unless it is in writing.
4.2.2 Request for Extension. The Initial ENA Negotiating Period may be
extended by the mutual consent of the City and Developer for up to two (2) additional periods of
thirty (30) days each. Developer may request each such extension by providing written notice to
the City no later than twenty (20) business days prior to the expiration of the then -applicable ENA
Negotiating Period. The City will determine whether Developer has negotiated diligently and in
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good faith and, whether reasonable and sufficient progress has been made toward fulfillment of
the requirements of this ENA in its consideration of any extension request.
4.2.3 Authority to Extend. The City hereby delegates to the City Manager the
authority to agree to grant the extensions specified in Section 4.2.2 upon determination by the City
Manager or his or her designee in their sole and absolute discretion that Developer has negotiated
diligently and in good faith and that reasonable and sufficient progress has been made toward
fulfillment of the requirements of this Agreement. No such extension of time shall be effective
unless it is in writing. All extensions other than the two extensions of thirty (30) calendar days for
which the City Manager has authority under Section 4.2.3 shall require approval by the City
Council, which approval shall be at the sole discretion of the City Council.
4.2.4 HCD Documentation. Upon conclusion of negotiation of the
Transaction Documents and during the Offer Period, provided there is agreement by Developer
and the Transaction Documents are considered acceptable by City staff for submittal to the City
Council, the City shall submit to HCD the required documents (anticipated to comprise the surplus
property resolution and the RFP) ("HCD Submittal") to ensure compliance with the SLA
Regulations. HCD will have the statutorily authorized time period following its receipt of the HCD
Submittal to inform the City whether or not the HCD Submittal violates the SLA Regulations. If
HCD concludes that the HCD Submittal is not in compliance with the SLA Regulations, then the
Parties shall meet in a good faith effort to resolve any alleged non-compliance identified by HCD.
4.2.5 Offer to Purchase. The execution by Developer of a form DDA and DA
each in form and substance considered acceptable by City staff, and submittal by Developer of
same to the City shall constitute an offer to purchase the Development Parcels on the terms set
forth therein. If Developer has not submitted an executed form of DDA and DA to the City prior
to the termination of the ENA Negotiating Period, this ENA shall automatically terminate. If
Developer does submit executed versions of each of the foregoing agreements, then Developer
hereby agrees that it shall not withdraw such offer to purchase for a period of ninety (90) days
following submittal of the executed DDA and DA to the City. Such offer shall remain in effect for
an additional period of ninety (90) calendar days following the submittal of the last of the executed
DDA and DA to the City ("Offer Period") to enable the City to (a) consider the environmental
impacts of the proposed Transaction Documents as evaluated in an environmental document
prepared by the City during the ENA Negotiating Period in accordance with the California
Environmental Quality Act; (b) determine whether it desires to enter into such a DDA and DA; (c)
submit the appropriate documentation to HCD as required pursuant to Section 4.2.4; (d) take the
actions necessary to authorize the City to sign the DDA and DA if the City desires to do so, and
(e) sign the DDA and DA. If the City has not considered and approved the DDA and DA by such
90th day or, at the end of any extension mutually agreed upon by the City and Developer in writing,
then this Agreement shall automatically terminate. In the event an offer is timely submitted, this
ENA shall remain in full force and effect during the Offer Period.
4.2.6 Rights of the Parties to Earlier Terminate ENA for Breach. Unless
earlier terminated pursuant to the terms of this Section 4.2.6, the ENA shall remain in effect for
the ENA Negotiating Period and, if applicable, the Offer Period.
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(a) Termination Due to Breach. Developer may terminate this
ENA and the ENA Negotiating Period upon provision of seven (7) calendar days' prior written
notice to the City alleging breach of Section 4.4 by the City, and the City may terminate this ENA
upon provision of seven (7) calendar days' prior written notice to Developer alleging breach by
Developer of any provision of this ENA, including, without limitation, Section 2.1.
(b) Developer Right to Terminate. Developer may terminate this
Agreement in the event that during the course of the investigations and evaluation of the
Development Parcels and the Project, it determines in good faith that the Project is not feasible or
financeable. The City shall return the deposit (less any costs of the City associated with negotiation
of the DDA from the Effective Date together, with any interest accrued thereon) to Developer upon
termination of the Agreement in the event Developer has negotiated in good faith hereunder and
materially complied with the terms hereof.
(c) Termination Following Determination of City Council Not to
Approve DDA or DA. The effectiveness of the DA and DDA are conditioned on approval,
execution and effectiveness of both agreements. Therefore, notwithstanding any other provision
of this ENA, if the DDA and DA are executed and presented by Developer to the City pursuant to
Section 4.2.5, and the City Council disapproves (affirmatively or by failure to consider) either the
DDA or DA or the City Council approves either the DDA or the DA but does not approve
(affirmatively or by failure to consider) the second such document, then, upon the earlier of (i) the
termination of the Offer Period or (ii) the affirmative determination of the City Council not to
approve either the DA or DDA, this ENA and all rights of the Parties in and to the first document
approved, if any, shall automatically terminate. The determination of the City to approve or
disapprove the DDA and/or the DA, any other Transaction Documents or any entitlements related
to the Project shall be made in the sole discretion of the City Council and the City Council's
determination to disapprove or not to take action on the DDA, the DA, any other Transaction
Document or any Project entitlements shall not be a breach of the City's obligation to negotiate
diligently, in good faith or exclusively under this ENA.
4.2.7 Cooperation Following Termination. Upon any termination of the ENA
pursuant to this Section 4.2, the parties will cooperate and execute such instruments as may be
reasonably requested by the City to effect such termination. The provisions of this Section will
survive termination of this ENA.
4.3 Deposits and Costs.
4.3.1 Good Faith Deposit. Prior to the execution of this Agreement by the
City, Developer has submitted to the City a good faith deposit in the sum of One Hundred and
Fifty Thousand Dollars ($150,000) (the "ENA Deposit") in the form of a check or wire transfer to
the City to ensure that Developer will proceed diligently and in good faith to negotiate and perform
all of Developer's obligations under this ENA and to also be applied to cover any City Transaction
Expenses (defined below) incurred by the City arising after the Effective Date of this ENA and
with respect to preparation of this ENA. The ENA Deposit shall be deposited in an account in a
bank or trust company selected by the City. Interest, if any, shall accrue to any balances in the
account for the benefit of Developer and as additional security for Developer's obligations
hereunder. The ENA Deposit will be expended to cover the City Transaction Expenses, as further
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described in Section 4.3.2 and the ENA Deposit will be depleted accordingly. Each time the
amount of funds in the ENA Deposit account is depleted below Fifty Thousand Dollars ($50,000),
Developer shall be required to submit an additional Fifty Thousand Dollars ($50,000) to City
which shall be credited by the City to the ENA Deposit account. Amounts due to the City on
account of City Transaction Expenses and deducted by the City from the ENA Deposit are referred
to herein as "City Expense Payments".
4.3.2 City Transaction Expenses. From and after the Effective Date, the ENA
Deposit may be used by the City to pay the City's third party predevelopment costs including,
without limitation, costs and expenses of the City with respect to City staff, and fees and expenses
of third party consultants, the City Attorney's office and outside legal counsel, and all other
expenditures required in connection with the drafting, negotiation and execution of this ENA, the
Transaction Documents or termination of this ENA, including any and all City third party fees and
costs incurred by legal counsel, financial and other consultants ("City Transaction Expenses").
City Transaction Expenses do not include any fees or deposits required of Developer for
processing entitlement applications or complying with provisions of the California Environmental
Quality Act ("CEQA") or its State CEQA implementing regulations. Determination of costs,
expenses, and fees constituting City Transaction Expenses shall be made by the City in its sole
discretion and Developer shall upon request be entitled to receive summary notices from the City
setting forth amounts constituting City Transaction Expenses to be retained by City.
4.3.3 Return of Deposit Under Specified Conditions. If the Parties enter into
a DDA and DA within the time period identified in Section 4.2 of this ENA, the City shall return
any remaining unused funds in the ENA Deposit account to Developer or Developer can apply it
to any additional deposit required as security for the performance under the DDA. The City may
retain any remaining unused portions of the ENA Deposit only if Developer has not negotiated
diligently or in good faith or has not carried out its obligations under this ENA and the City has
negotiated diligently and in good faith and has carried out its obligations under this Agreement.
The Developer's failure to submit to the City plans, reports, studies, investigations, applications
and materials specified in Section 6 of this ENA within the time periods specified therein, shall be
deemed to demonstrate Developer's failure to negotiate diligently and in good faith and its failure
to carry out its obligations hereunder. If Developer has failed to do so, inasmuch as the actual
damages which would result from a breach by Developer of its obligations under this Agreement
are uncertain and would be impractical or extremely difficult to determine, the City shall be entitled
to retain any remaining unused portions of the original $150,000 ENA Deposit plus interest, if any,
which has accrued thereon, as liquidated and agreed damages.
4.3.4 Not Sole Remedy of City. Subject to Section 10.6 of this ENA, by the
initials of their respective signatories hereunder, the City and Developer acknowledge and agree
that forfeiture of the original amount of the ENA Deposit (together with any interest earned and
accrued thereon) is not in lieu of any other relief, right or remedy to which the City might be
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entitled by reason of Developer's default (other than a default in any obligation to negotiate in
good faith which shall be governed by the preceding paragraph).
CITY'S INITIALS
r
DEVELOPER'S INITIALS
4.3.5 Additional DDA Deposit. Developer acknowledges that it is currently
anticipated that the DDA shall require an. additional deposit in an amount to be determined as
security for the performance of Developer's obligations under the DDA.
4.3.6 Costs and Expenses Borne by Developer. Developer acknowledges and
agrees that the. City shall have no responsibility to pay or reimburse Developer for costs and
expenses incurred by Developer in connection with this ENA or the compliance by Developer with
its obligations under this ENA unless the City assumes any specific responsibilities in the fully
executed DDA. Costs and expenses for which Developer shall be responsible include all pre -
contractual expenses described in the RFP, all City Transaction Expenses and all costs and
expenses incurred by Developer with respect to compliance with the tens of this ENA.
4.3.7 Payment of Outstanding„ Amounts. Upon a termination of this ENA
other than as set forth in Section 4.4, to the extent that the funds provided by Developer to pay the
City Transaction Expenses are not sufficient to pay all City Transaction Expenses, Developer shall.
promptly fund the amount remaining unpaid to the City.
4.3.8 Survival of Provisions. The provisions of this Section 4.3 shall survive the
termination of this Agreement.
4.4 Exclusivity; Good Faith. During the period of exclusive negotiation, the City
covenants and agrees to negotiate exclusively with Developer and shall not solicit another party
.for the Project or enter into any agreement with any other party regarding the development of the
Development Parcels or any portion thereof. The City acknowledges and agrees that but for this
exclusivity, Developer would not have entered into this ENA. In the event a court of competent
jurisdiction determines in a final decision that the City has breached this exclusivity covenant, the
City shall be deemed to have failed to negotiate in good faith. For any breach of the covenant of
good faith by the City, provided a DDA has not. been entered into pursuant to this ENA,
Developer's sole remedy shall be the termination of this ENA and the return of the ENA Deposit
(together with interest accrued thereon) and any other deposits made by Developer pursuant to this
ENA.
4.5 Insuection; License.
4.5.1 Access License. The City hereby grants to Developer, for use by the
Developer and its employees, representatives, agents, contractors and consultants (collectively, the
"Developer Parties"), a license ("License") during the ENA Negotiating Period to enter upon the
Development Parcels for purposes of conducting a due diligence inspection, provided that
Developer shall and shall. cause the Developer Parties to: (a) deliver to the City written evidence
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that Developer has procured the insurance required under Section 4.5.2; (b) give the City twenty-
four (24) hours telephonic or written notice of any intended access which involves work on or may
result in any impairment of the use of the Development Parcels; (c) access the Development
Parcels in a safe manner; (d) conduct no invasive testing or boring without the written consent of
the City; (e) allow no dangerous or hazardous condition created by Developer and/or the Developer
Parties to continue beyond the completion of such access; (f) comply with all laws and obtain all
permits required in connection with such access, and (g) conduct inspections and testing, subject
to the rights of any existing tenants or contractors doing work on the Development Parcels, if any
(which inspections and testing, if conducted at times other than normal business hours, shall be
conducted only after obtaining the City's consent, which shall not be unreasonably withheld). The
limited license granted herein is revocable by the City during the continuation of any breach of
this Agreement by Developer and shall be automatically revoked and terminated, without further
action of the City, upon the termination of the ENA Negotiating Period.
4.5.2 Insurance. Prior to commencement of any access or investigative
activities on the Development Parcels, Developer, at its sole cost and expense, shall obtain or cause
the Developer Parties, with respect to their access and investigative activities, to obtain, such types
and amounts of insurance coverage as set forth in Exhibit B.
4.5.3 Indemnity. Developer hereby agrees to indemnify, defend protect and
hold the City and the City Parties free and harmless from and against any and all Claims arising in
connection with or resulting from or related to: (a) Developer's or the Developer Parties' exercise
of the License, including, without limitation, entry onto or access to the Development Parcel, or
breach by Developer or any Developer Parties of the terms and conditions of the License; (b)
Developer's or Developer Parties' exercise of any rights under the License with respect to the
Development Parcel or the Project including, without limitation, any inspections, surveys, tests or
studies performed by Developer or the Developer Parties; (c) Developer's or Developer Parties'
presence, activities or work on or related to use of the Development Parcel and any mechanics' or
materialmen's liens arising with respect thereto; (d) bodily injury to or death of any person
(including, without limitation, any of the City Parties), or (e) damage to or loss of use of property
resulting from any of the foregoing, save and except to the extent such claims result from the gross
negligence or willful misconduct of the City or its agents, employees or representatives. Developer
shall keep the Development Parcels free and clear of any mechanics' liens or materialmen's liens
related to Developer's inspection of the Development Parcels.
4.5.4 Survival of Provisions. The insurance obligations in Section 4.5.2 and
Exhibit B and the indemnification by Developer set forth in Section 4.5.3 shall survive the
termination of this Agreement and the execution of the DDA and shall survive and not merge into
any deed granted pursuant to the DDA.
5. Proposed Development Conceut.
5.1 Compliance with Existing Land Use and Zoning Requirements. The proposed
Project to be negotiated hereunder shall include the development and use of the Development
Parcels consistent with the MCAS Tustin Reuse Plan, the General Plan, and the Specific Plan and
any approved Density Bonuses granted under State and City density bonus provisions.
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5.2 Terms of DDA and DA to be Negotiated. Developer and the City agree that it is
their intent during the ENA Negotiating Period to negotiate a DDA and DA which are anticipated
to address the following terms and conditions and such other terms and conditions as they may
agree, and which will be binding upon City and Developer and, to the extent provided thereby,
their respective successors and assigns. The following terms and conditions shall not be binding
upon the Parties during the term of this ENA and are provided in this ENA only to provide general
guidance for negotiation of the DDA and DA:
5.2.1 Essential Terms. The DDA shall contain terms and conditions for
conveyance by the City to Developer of the Development Parcels including but not limited to the
manner of conveyances, the conditions precedent to conveyance and the amount of the purchase
price, shall be determined as part of the negotiation of and detailed in the DDA.
5.2.2 As -Is Conveyance. While Developer should undertake its own
investigation to determine the presence of hazardous materials and suitability of the Development
Parcels for development, Developer acknowledges and agrees that if the Development Parcels is
conveyed by the City pursuant to a DDA, the Development Parcels shall be conveyed on and "AS -
IS, WHERE -IS AND WITH ALL FAULTS" basis, and Developer shall be obligated to release,
defend, indemnify and hold harmless the City with respect to its acquisition and development of
the Development Parcels and the condition of the Development Parcels, including any and all land
use, soil and environmental conditions of the Development Parcels.
5.2.3 Development. The Developer shall design and construct the Project on
the Development Parcels at its own cost and expense in accordance with the scope of development
and a schedule of performance to be negotiated as part of the DDA and in accordance with plans
and specifications prepared by Developer and approved by the City in accordance with such
schedule of performance and in compliance with all requirements and regulations of the City
including, without limitation, the Specific Plan and applicable zoning.
5.2.4 Product Mix and Density Bonus. Developer understands and
acknowledges that the product mix proposed for the Project will be subject to approval by the City,
in its governmental capacity, of a density bonus, and any necessary City entitlement approvals
requested. The actual number of units and the level of affordability will be based on compliance
with development standards in the Specific Plan and any requirements contained in the DDA and
any approved density bonuses granted under the City Code, including any incentives and/or
development standard modifications granted under the City's Density Bonus Ordinance. The
Project will include construction and maintenance for rental for a period of 55 years (pursuant to
affordable housing covenant approved by the City in its sole discretion) of the Affordable Housing
Units. Developer has agreed to negotiate with the City the actual location by product type of the
affordable housing units. Developer acknowledges that the Project shall require grant of a density
bonus from the City and agrees that in requesting a density bonus, it will not request any financial
incentives from the City.
5.2.5 Tustin Legacy Backbone Infrastructure Program Costs. In connection
with development of the Development Parcel, Developer shall make a fair share contribution to
the Tustin Legacy Backbone Infrastructure Program based on the allocations to the Development
Parcels in the City's Tustin Legacy Backbone Infrastructure Financing Program-2017 Update
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adopted October 17, 2017 as the same may be amended from time to time ("Tustin Legacy
Backbone Infrastructure Program"). Pursuant to the Tustin Legacy Backbone Infrastructure
Program, a fair share contribution shall be allocated to the Development Parcels ("Project Fair
Share Contribution"). The DDA shall address the timing of payment of the Project Fair Share
Contribution by Developer to the City. Developer acknowledges that an amendment to the Tustin
Legacy Backbone Infrastructure Program is underway at the City.
5.2.6 Local Infrastructure. The Developer will also be responsible for all costs
of any necessary local infrastructure improvements and in -tract improvements as required for the
development of the Project.
5.2.7 Applications. Developer shall prepare and process applications for and
obtain from the City and other federal, state and local jurisdictions, all applicable land use,
planning and zoning approvals for the proposed development with the support of the City. These
entitlements will be required to be consistent with the Specific Plan, unless as part of approval of
any density bonus application under the City Code incentives and/or modifications to development
standards are granted by the City.
5.2.8 Project Costs. Project costs and revenues will be separately analyzed
and funding of all project costs will be the responsibility of Developer.
5.2.9 No City Funding. Developer anticipates implementation of the Project
including, without limitation, the Affordable Housing Units without the need for any expenditure
by or loans from the City.
5.2.10 Development Fees. In connection with its development of the
Development Parcels, Developer acknowledges that the Development Parcels will be subject to
applicable development fees, including but not limited to those required by the City of Tustin, or
other jurisdictions including without limitation (a) the Transportation Corridor Agencies'
Foothill/Eastern Corridor Fee, (b) state -mandated school impact fees and assessments by TUSD,
(c) Orange County School Facility Bonds (Measure G and Measure L), and (d) utility meter and
connection fees, including from Irvine Ranch Water District. Developer acknowledges that TUSD
has imposed CFD 15-02 ("TUSD CFD") upon portions of Tustin Legacy which may be applicable
the Development Parcels.
5.2.11 Transfer and Assignment Restrictions. Developer acknowledges that the
DDA shall contain limitations on transfer and assignment of the rights of Developer including the
right of the City to approve in its sole discretion all assignments and transfers by Developer of
interests in Developer or in the DDA.
5.2.12 Mortgagee Limitations and Subordination. Developer acknowledges
that the DDA shall impose limitations on mortgages and mortgagees and shall require
subordination of any mortgage to the DDA and DA and other transaction documents as applicable.
5.2.13 Remedies and Termination Rights. Developer acknowledges that the
DDA shall contain remedies and termination rights in favor of the City for breach of the DDA,
which shall include without limitation, rights of reverter in conveyed land.
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6. Developer's Responsibilities.
6.1 Status Reports. Developer agrees to make bi-weekly oral and/or written reports
advising the City and/or its staff of all matters and studies being made, including Developer's
progress in analyzing the feasibility of the Project as may be requested by the City or its staff.
6.2 Development Team.
6.2.1 Developer Team. Within ten (10) days following the Effective Date,
Developer shall submit in writing to the City full disclosure of the names of Developer's agents,
authorized negotiators, professional employees and other associates of Developer who may be
participants in development of the Project and other relevant information concerning the above,
such as addresses, telephone numbers and employers. Developer shall also designate and submit
in writing to the City the names of all Developer's lead negotiators who shall have authority to
make decisions on behalf of Developer.
6.2.2 Affordable Housing Developer. If Developer intends to select an
affordable housing developer for development of the Affordable Housing Units, then within sixty
(60) days following the Effective Date, Developer shall submit in writing to the City the name of
the for -profit or non-profit developer with experience in development of affordable housing in the
State of California proposed by Developer, together with the following information regarding that
entity:
(a) the names and biographies of the proposed affordable housing
developer, its controlling person and its proposed organization structure;
(b) a description of the experience of the proposed affordable
housing developer and its controlling person within the prior ten (10) years in securing financing
for construction of affordable housing projects in California and negotiating with a government
agency over land conveyance, and litigation with any public agency during that ten (10) year
period;
(c) the proposed affordable housing developer's authorized
negotiators, professional employees, consultants (including architect, general contractor, civil
engineer and legal) and other associates of Developer who may be participants in development of
the Affordable Housing Units and other relevant information concerning the above, such as
addresses and telephone numbers;
(d) the names and biographies of the proposed equity investor(s)
and their financial capacity, if different than Developer;
(e) a description of other similar affordable housing projects
developed and leased by, or sold by, the proposed affordable housing developer in California over
the preceding five (5) year period together with the dates of involvement and the success of the
projects and highlighting market innovation;
(f) the experience of the proposed affordable housing developer
managing similarly sized multifamily communities with affordable units, and
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(g) current audited financial statements of the proposed affordable
housing developer or financial statements certified by the chief financial officer or other
appropriate authorized officer or authorized representative of the proposed affordable housing
developer, if it does not have current audited financial statements, together with the same
information for its proposed equity investors if different from the proposed affordable housing
developer or Developer.
The City shall have thirty (30) calendar days following submission by Developer of all of the
foregoing information to review and approve or disapprove the proposed affordable housing
developer. Developer's selection of an affordable housing developer shall be subject to the
approval of the City in its sole discretion. Developer has advised the City that it is in discussions
with USA Properties and Meta Housing as Affordable Housing Developers which have been
selected by Developer based on Developer's understanding of their track record of developing
high -quality affordable housing communities in California.
6.3 Financial Status.
6.3.1 Financial Capacity. Developer shall continue to be responsible for
demonstrating to the City Developer's financial capacity and capability to perform its obligations
under this ENA and the proposed DDA. Subject to the provisions of Section 6.43.2 (the
"Confidentiality Protocols"), Developer shall submit any additional financial information
required to demonstrate Developer's, and if applicable, Affordable Housing Developer's financial
capacity and capability to perform its obligations under this Agreement and the proposed DDA as
requested by the City within thirty (30) days of a request. Developer intends to form a single
purpose limited liability company to enter into the DDA and DA and acquire title to the
Development Parcels. The single purpose entity will be 100% owned within Developer's corporate
structure without any third party investment. Supporting documents with respect to that structure
will be provided to the City upon formation of the entity. Developer shall identify with specificity
the documents which Developer wants the City to maintain as confidential documents and a
statement as to why the request is consistent and complies with the provisions of the Public
Records Act of the State of California (Govt. Code Section 6250 et seq.) ("CPRA"). If
confidentiality is requested and if nondisclosure under the CPRA is allowed, the documents shall
be delivered to and maintained by the City and copies shall not be disseminated and shall be
handled by the City in accordance with Section 10.13 of this ENA. The City's agents, negotiators
and consultants may review the statements as necessary as long as such parties agree to maintain
the confidentiality of such statements.
6.3.2 Confidentiality Protocols. Developer acknowledges that documents or
other "records" (as that term is defined in the California Public Records Act ("CPRA")) related to
the Project may be required to be made public upon request. California Government Code Section
6253(a) provides that "[p]ublic records are open to inspection at all times during the office hours"
of the City. If Developer believes that any documents or other records provided to the City are
exempt from the CPRA, Developer shall state in writing the legal basis for Developer's belief that
such documents or other records are exempt from the CPRA, Developer and City shall meet and
confer about exemption of such documents or other records, and City shall evaluate the asserted
basis for the exemption(s) in good faith. If City determines that the requested documents or other
records qualify for an exemption, Developer shall conspicuously mark the documents and other
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records "Confidential" and shall submit them to City, and City will not make the records public
except as otherwise required by law or by court order. City's failure to correctly determine the
applicability or inapplicability of an exemption to the CPRA shall not constitute a breach of this
ENA or the Transaction Documents. City will endeavor to notify Developer of any request made
for records related to the Project when the request for the records allows adequate time to provide
such notice. Developer agrees to defend, indemnify and hold harmless the City and the City Parties
from any claims for damages, costs, court costs, awards of attorney fees, or related claims in all
lawsuits and writ proceedings seeking to make records public that Developer has marked
"Confidential" hereunder and requests the City to protect as confidential. City shall promptly
notify Developer of any claim made against City of an alleged breach of CPRA resulting from
document(s) that Developer elected to mark as "Confidential" so that Developer may evaluate
such claim and its determination of the confidentiality of such document(s). In no event shall the
City be required to maintain as confidential any materials required by law to be disclosed by
Developer, or otherwise disclosed by Developer in connection with its public filings.
6.4 Assignment; Transfer. If Developer determines to joint venture or partner
development with an Affordable Housing Developer or if Developer determines to form a new
legal entity to develop the Development Parcels, Developer shall promptly inform the City of such
determination and submit to the City the joint venture's or partner's most recent financial
statements and the financial statements of its key principals. The assignment of Developer's rights
under this Agreement to any new entity, partnership or joint venture may be approved in writing
by the City, provided that the City is satisfied in its sole discretion, that the new entity, partnership,
or joint venture has the financial capability to perform under this Agreement and the proposed DA.
Identification of an Affordable Housing Developer shall be in accordance with the provisions of
Section 6.2.2.
6.5 Design Review/Entitlements. It is understood and agreed by Developer that the
quality, character and uses proposed for the Project are of particular importance to the City and
that planning and design review approval and other entitlements by the City will be required for
the development of the Development Parcels. Developer and the proposed architects for the project
shall meet with representatives of the City to review and come to a clear understanding of the
planning and design criteria required by the City. Within 20 days after the Effective Date,
Developer shall submit a schedule for entitlement processing. Within sixty (60) days after the
Effective Date, Developer shall submit for approval of the City preliminary revised design
drawings and related documents containing the overall plan for development of Developer's
Project including the following: preliminary site plan showing building layout and dimensions,
parking, landscaping and access on or related to each individual parcel, floor plans, preliminary
materials call -outs and conceptual building renderings and a development schedule.
6.6 Project Financial Pro Forma. Within sixty (60) days after the Effective Date,
Developer shall submit revised overall cost and revenue estimates, project cost and revenue data
including information on Project's financial return adequate to enable the City to evaluate
Developer's Business offer and economic feasibility of the proposed development of the Project,
as proposed, on the Development Parcels for the entirety of the Project, including without
limitation the Affordable Housing Units. The information submitted shall be in the same Business
Plan format required in the RFP. The financial pro forma(s) for the Project shall reflect any
comments the City provides to Developer on the preliminary site plan.
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6.7 Additional Information. Developer understands and agrees that the City's
negotiating team reserves the right at any time to reasonably request from Developer additional
information, including data and commitments to ascertain the depth of Developer's capability and
desire to develop the Development Parcels expeditiously. The City's negotiating team will provide
a reasonable time in which Developer may obtain and submit to the City such additional
information.
6.8 Contacts During Negotiation. Developer shall only negotiate with the City's
negotiating team (as defined in writing by the City Manager or his or her designated representative)
and with no other persons unless expressly authorized to do so by the City's negotiating team.
During the period of negotiations, Developer shall make no statements to the media about the
proposed Project without the approval of the City Manager. The Developer's failure to comply
with the provisions of this Section shall be conclusive evidence that Developer has not "negotiated
in good faith."
6.9 Environmental and Other Studies.
6.9.1 Environmental Requirements. Compliance with CEQA is a legal
precondition to any final City action to approve and execute a DDA and DA for the Project.
Developer shall cooperate with the City and abide by the City's environmental compliance
procedures and fee requirements, which include, but are not limited to, the obligation to deposit
funds to pay all of the City's costs of preparing any additional required environmental studies as
may be determined.
6.9.2 Plans, Reports, Studies and Investigations. Developer shall provide the
City, without cost or expense to the City, copies of all plans, reports, studies or investigations
(collectively, "Plans") prepared by or on behalf of Developer for development of the Project. All
Plans shall be prepared at Developer's sole cost and expense. If this Agreement is terminated for
any reason other than a material breach or default hereunder by the City, Developer shall, at City
request, transfer Developer's rights to any or all Plans identified by the City, but in no event shall
the cost to the City exceed five hundred dollars ($500.00). Upon such request, Developer shall
deliver to the City copies of all Plans requested by the City together with a bill of sale therefore,
provided that Developer makes no representations, warrantee or guarantee regarding the
completeness or accuracy of the Plans, and Developer does not covenant to convey the copyright
or other ownership rights of third parties thereto. Such Plans shall thereupon be free of all claims
or interests of Developer or any liens or encumbrances. Upon the City's acquiring Developer's
rights to any or all of the Plans, the City shall be permitted to use, grant, license or otherwise
dispose of such Plans to any person or entity for development of the Development Parcels or any
other purpose; provided, however, that Developer shall have no liability whatsoever to the City or
any transferee of title to the Plans in connection with the use of the Plans.
6.9.3 Hazardous Materials Assessment. Developer acknowledges that
pursuant to the Navy Quitclaim Deed, the Navy found and determined that there was no
contamination on the Development Parcels and issued a Finding of Suitability for Transfer for
Southern Parcels 4-8, 10-12, 14, and 42 and Parcels 25, 26, 30-33, 37, and Portions of 40 and 41
dated September 28, 2001 ("FOST"). The City would intend upon approval of a DDA to sell and
convey by quitclaim in the same manner as the parcels were conveyed to the City to include the
Tustin Irvine Company ENA 5.14.24 18 Tustin/Irvine Company
Exclusive Negotiating Agreement
DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
covenants and warranties as identified in the Navy Quitclaim Deed.
6.9.4 Insurance. The Developer, and any permitted assignee(s), will be
responsible in conjunction with any DDA to provide commercial general liability, workers
compensation, builder's risk property insurance, and environmental insurance.
7. The Developer.
7.1 Nature of Developer. Developer will be The Irvine Company LLC or such other
affiliated business entity (such as another limited liability corporation) as the City may approve.
Concurrently with its execution of the DDA and DA, Developer shall submit a copy of the
applicable formation documents relating to Developer and any corporate members of Developer
(i.e., as applicable, articles of incorporation, partnership agreement, and/or limited liability
corporation and articles of incorporation, statement of information and operating agreement).
7.2 Offices of Developer. The principal offices of Developer are located at 550
Newport Center Dr., Newport Beach, California 1 92660-7011. The principals of Developer are as
follows: (a) Todd Keller, President, Irvine Company Apartment Development, and (b) Scott Frick,
Senior Vice President, Irvine Company Apartment Development.
7.3 The Developer's Consultants and Professionals. Developer is required to make
full disclosure to the City of any changes to its principals, officers, stockholders, partners, joint
venturers, Project employees, and other associates and all other pertinent information concerning
Developer and its associates. Developer agrees to substitute or supplement any of its consultants
and professionals as reasonably requested by the City.
Y ITS I= riTIT-M if iL
8.1 Financial Capacity. Any additional financial information required to demonstrate
financial capacity and capability to perform the obligations under this Agreement of Developer
shall be submitted to the City or its consultant as requested by the City for the purposes of this
Agreement. Developer intends to form a single purpose limited liability company to enter into the
transaction documents and acquire title to the Development Parcels. The single purpose entity will
be 100% owned within Developer's corporate structure without third party investment. Supporting
documents with respect to that structure will be provided to the City upon formation of the entity.
In the event that Developer desires to assign any of rights, duties or obligations under this ENA to
another person, Developer acknowledges that the City may condition its consent to such
assignment as required under Sections 6.4 and 10.10 hereof upon the delivery of financial
information to demonstrate the financial capacity and capability of such proposed assignee to
perform the obligations under this ENA of Developer.
8.2 Equity. Except as may otherwise be agreed by the City and Developer with respect
to the Affordable Housing Units, Developer proposes to obtain its equity capital for development
of the Project from in-house financing. The Affordable Housing Units may be financed by an
Affordable Housing Developer with a variety of funding sources including tax-exempt housing
revenue bonds proposed to be issued by the California Statewide Communities Development
Authority ("CSCDA"), and private funding sources. Developer understands that the closing and
conveyance of property will not be contingent on receipt of any outside funding from either
Tustin Irvine Company ENA 5.14.24 19 Tustin/Irvine Company
Exclusive Negotiating Agreement
DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
CSCDA or other sources.
8.3 Construction Financing. Developer proposes to finance project costs with 100%
equity for all portions of the Project other than the Affordable Housing Units. With respect to
construction of the Affordable Housing Units, construction financing may be obtained from
CSCDA bond proceeds for the development and from a reputable, institutional lender as may be
approved by the City.
8.4 Long -Term Development Financing. Developer is capable of providing financing
for the development of the Project other than the Affordable Housing Units without the necessity
of third party financing. An Affordable Housing Developer may commit to the provision of long-
term development financing for the Affordable Housing Units from a potential reputable,
institutional lender, as may be approved by the City.
8.5 Bank and Other Financial References. Developer shall provide the City with
Developer's bank and other financial references as requested by the City from time to time.
8.6 Full Disclosure. Developer will be required to make and maintain full disclosure
to the City of the methods of financing and the financing documents to be used in the development.
9. City's Responsibilities.
9.1 Environmental Requirements. Developer agrees to finance and supply
information and otherwise assist the City as requested to enable the City to determine the
environmental impact of the proposed development of the Project as described by the DDA and
DA and to prepare such addenda or supplements to the Final EIS/EIR, if any, as may be needed to
be completed for the development.
9.2 Assistance and Cooperation. The City shall cooperate with Developer by
providing appropriate information and assistance as reasonably requested by Developer.
9.3 Plans and Studies. To the extent not previously provided, the City shall, within ten
(10) business days following the Effective Date and at no cost to Developer, provide Developer
with copies of all plans, reports, studies, investigations and other materials the City may have
pertinent to disposition of the Development Parcels and/or development of the Project on the
Development Parcels provided, however, that the City makes no representations, warrantee or
guarantee regarding the completeness or accuracy of any plans, reports, studies, investigations and
other materials (whether delivered by the City before or after the Effective Date) and the City shall
have no liability whatsoever to Developer or any transferee of Developer in connection with such
plans and studies or the use thereof for any purposes. Without limiting the generality of the
foregoing or the release by Developer in this ENA, Developer acknowledges receipt of the
environmental documents listed on Exhibit C ("Environmental Documents").
10. Miscellaneous.
10.1 Assistance and Cooperation. Developer and the City shall reasonably cooperate
with one another to achieve the objectives and purposes of this ENA.
Tustin Irvine Company ENA 5.14.24 20 Tustin/Irvine Company
Exclusive Negotiating Agreement
DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
10.2 Real Estate Commissions. The City has retained CBRE pursuant to a separate
agreement which stated that Developer will be responsible for payment of amounts due to CBRE
thereunder in connection with the Transaction described in this ENA. Developer agrees to
indemnify and hold the City and the City Parties harmless from any and all Claims arising from or
in any way related to any claim by any broker, agent, or finder regarding this ENA or the sale or
development of the Development Parcels or any portion thereof. The provisions of this Section
10.2 shall survive the termination of this ENA. If, and only if, the closing under the DDA occurs,
Developer will pay a commission to CBRE at such closing in the amount of one percent (1%) of
the purchase price set forth in the DDA. City represents that it has not engaged any broker, agent,
or finder in connection with this ENA other than CBRE.
10.3 No City Duty. Except as expressly provided above in Section 4.4, the City shall
have no obligations or duties hereunder and no liability whatsoever in the event the City and
Developer fail to agree upon or to execute a DDA and a DA.
10.4 Non -Liability of City Officials and Employees. No elected or appointed official,
officer, representative, director, staff member, attorney or employee of the City shall be personally
liable to Developer or any successor in interest in the event of any default or breach by the City or
for any amount which may become due to Developer or to its successor, or on any obligations
under the terms of this ENA.
10.5 Entire Agreement. This ENA represents the entire agreement of the City and
Developer with respect to the matters set forth herein and supersedes any prior negotiations or
contemporaneous writings or statements. This ENA may not be amended except in writing signed
by each of the City and Developer hereunder.
10.6 Attorneys' Fees. If either the City or Developer brings an action or files a
proceeding in connection with the enforcement of its respective rights or as a consequence of any
breach by any party of its obligations hereunder, then the Prevailing Party in such action or
proceeding shall be entitled to have its reasonable attorneys' fees and out-of-pocket expenditures
paid by the losing party, provided that the prevailing party's fees shall be payable at the actual
contractual hourly rate for City's litigation counsel at the time the fees were incurred, but in no
event more than $400 per hour. "Prevailing Party" within the meaning of this Section 10.6
includes a party who agrees to dismiss an action or proceeding in consideration for the other party's
payment of the amounts allegedly due or performance of the covenants allegedly breached or
obtains substantially the relief sought by such party.
10.7 Covenant Against Discrimination. Developer shall not discriminate against nor
segregate, any person or group of persons on account of sex, race, color, age, marital status,
religion, handicaps, creed, national origin or ancestry in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the Development Parcels, nor shall Developer establish or
permit any such practice or practices of discrimination or segregation in the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the
Development Parcels.
10.8 Notices/Submittals. All notices, demands, consents, requests and other
communications required or permitted to be given under this ENA shall be in writing and shall be
Tustin Irvine Company ENA 5.14.24 21 Tustin/Irvine Company
Exclusive Negotiating Agreement
DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
deemed conclusively to have been duly given (a) when hand delivered to the other party; (b) three
(3) business days after such notice has been sent by U.S. Postal Service via certified mail, return
receipt requested, postage prepaid, and addressed to the other party as set forth below; (c) the next
business day after such notice has been deposited with an overnight delivery service reasonably
approved by the parties (Federal Express, Overnite Express, United Parcel Service and U.S. Postal
Service are deemed approved by the parties), postage prepaid, addressed to the party to whom
notice is being sent as set forth below with next -business -day delivery guaranteed, provided that
the sending party receives a confirmation of delivery from the delivery service provider, or (d)
when transmitted if sent by email to the email address set forth below; provided, however, that
notices given by email shall not be effective unless either (i) a duplicate copy of such notice is
promptly sent by any method permitted under this Section other than by email (provided that the
recipient party need not receive such duplicate copy prior to any deadline set forth herein) or (ii)
the receiving party delivers a written confirmation of receipt for such notice either by email or any
other method permitted under this Section. Any notice given by email shall be deemed received
on the next business day if such notice is received after 5:00 p.m. (recipient's time) or on a non -
business day. Unless otherwise provided in writing, all notices hereunder shall be addressed as
follows:
City: City Manager
City of Tustin
300 Centennial Way
Tustin, CA 92780
Email: citymanagergtustinca.org
With a copy to:
Director of Economic Development
City of Tustin
300 Centennial Way
Tustin, CA 92780
Email: director. edgtustinca. org
And with a copy to:
City Attorney
Woodruff & Smart
555 Anton Blvd., Suite 1200
Costa Mesa, CA 92626
Attention: David Kendig, Esq.
Email: dkendiagwoodruff.law
And with a cony to:
Hepner & Myers LLP
1241 Johnson Avenue, Suite 360
San Luis Obispo, CA 93401
Attention: Amy E. Freilich. Esq.
afreilichkHepnerMyers. com
Tustin Irvine Company ENA 5.14.24 22 Tustin/Irvine Company
Exclusive Negotiating Agreement
DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
Developer:
Scott Frick
Senior Vice President, Forward Planning
Irvine Company Apartment Development
550 Newport Center Drive
Newport Beach, CA 92660
sfrick@irvinecompany.com
Jay D'Elia
Vice President and Assistant General Counsel
The Irvine Company
550 Newport Center Drive
Newport Beach, CA 92660
a� delia(kirvinecompany.com
And with a copy to: Latham & Watkins LLP
12670 High Bluff Drive
San Diego, CA 92130
Attention: Stephanie L. Fontanes
stephanie.fontanes@lw.com
10.9 Action Taken. Following its approval by the City, this ENA shall be administered
by the City Manager or the City Manager's designee. Except where the terms of this ENA
expressly require the approval of a matter or the taking of any action by the City Council, any
matter to be approved by the City shall be deemed approved, and any action to be taken by the
City shall be deemed taken, upon the written approval by the City Manager (or the City Manager's
designee). The City Manager or the City Manager's designee shall have the authority to issue
interpretations, clarifications and confirmations with respect to this ENA and to determine whether
any action requires the approval of the City Council. All waivers of terms and conditions,
amendments and modifications of this ENA shall require the approval of the City Council.
10.10 Prohibition Against Assignments. This Agreement shall not be assigned by
Developer without the consent of the City in its sole discretion. Any attempted or purported
assignment by Developer of this ENA without the consent of the City as aforesaid shall be void
and a breach by Developer of its obligation to negotiate in good faith under this ENA.
10.11 No Third Party Beneficiaries. Execution of this ENA is not intended to create or
confirm any third -party beneficiary rights in or create any liability on the part of either the City or
Developer to any third parties this ENA.
10.12 Effect of Disposition and Development Agreement. Following mutual execution
by the City and Developer of a DDA and DA, this ENA shall be of no further force or effect,
except that, unless otherwise agreed in writing by Developer and the City, the releases set forth in
Section 3.5, the indemnities set forth in Section 4.5.3 and Section 10.2, the insurance requirements
set forth in Section 4.5.2 and Exhibit B and the confidentiality provisions of Sections 6.3 and 10.13
this ENA shall remain in effect with respect to claims arising during the term of this ENA. In the
Tustin Irvine Company ENA 5.14.24 23 Tustin/Irvine Company
Exclusive Negotiating Agreement
DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
event of any conflict between the provisions of this ENA and any DDA or DA approved by the
City and Developer, the provisions of the DDA and DA shall for all purposes prevail.
10.13 Confidentiality. The City and Developer represent and warrant that each shall keep
this ENA and all information and/or reports obtained from the other, or related to or connected
with the Development Parcels, the other party, this ENA, and until presentation to the City for
approval, the DDA and DA or any other documents negotiated by the City and Developer,
confidential and will not disclose any such information to any person or entity without obtaining
the prior written consent of the other party, except that the City shall have the right to disclose any
information contained in any third party reports obtained by Developer and Developer shall have
the right to make disclosures to its employees and independent contractors, including but not
limited to consultants, financial planners, outside counsel, and experts as necessary in order to
determine if the Project is feasible and financeable provided such entities and persons are made
aware the information is confidential. Notwithstanding the foregoing, this ENA, the draft DDA
and DA and all other material relating to this Agreement are subject to the provisions of the CPRA.
The City's use and disclosure of its agreements and records are governed by the CPRA and nothing
herein limits the City's right and obligation to comply with the CPRA or with laws mandating
public notice or disclosure of public records, including without limitation, agendas, public
hearings, staff reports and minutes produced in connection therewith, including, without limitation,
the Ralph M. Brown Act. The City makes no representation or warranty that writings and materials
provided to or generated by the City during negotiations will be exempt from the CPRA. The
provisions of this Section shall survive the termination of this ENA for a period of one (1) year
with respect to matters provided or disclosed during the term of this ENA if any.
10.14 Governing Law; Exclusive Venue. This ENA shall be interpreted in accordance
with California law. The parties agree that in the event of litigation, exclusive venue shall be in
Orange County, California.
10.15 Counterparts. This ENA maybe signed in one or more counterparts each of which,
when so executed, shall be deemed to be an original, and with the signatures delivered by
submission of materials by electronic means, which may include using either DocuSign or similar
program or email attachment, each of which shall constitute an original and all of which together
shall constitute one and the same agreement. This ENA shall not be effective until the execution
and delivery by the parties of at least one set of counterparts.
10.16 Business Day Defined; Performance of Acts on Business Days. All references
to "business days" in this ENA shall mean and refer to days on which the City of Tustin City
Hall is open for business. In the event that the final date for payment of any amount or
performance of any act under this ENA falls on a day on which the City of Tustin City Hall is
closed, such payment may be made or act performed on the next succeeding day upon which the
City of Tustin City Hall is open.
(remainder of page is blank; signatures commence on following page)
Tustin Irvine Company ENA 5.14.24 24 Tustin/Irvine Company
Exclusive Negotiating Agreement
DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
IN WITNESS WHEREOF, authorized signatories of the City and Developer
hereto have executed this ENA as of the date set opposite their signatures.
Dated:
APPROVED AS TO FORM
David Kendig
City Attorney
Hepner & Myers LLP
Special Real Estate Counsel to the City
Amy E. Freilich, Partner
"CITY"
City of Tustin
I0
Nicole Bernard
Acting City Manager
"DEVELOPER"
The Irvine Company LLC,
a Delaware limited liability company
Dated: AH 1 A0 By:
Todd Keller
Division President, Apartment Development
Ix
By.
colt Frick
Senior Vice President, Forward Planning
Tustin Irvine Company ENA 5.14.24 S-1 Tustin/Irvine Company
Exclusive Negotiating Agreement
DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
Exhibit A
Depiction of Development Parcels
(Site Map)
{See Attached)
Tustin Irvine Company ENA 5.14.24 Exhibit A Tustin/Irvine Company
Exclusive Negotiating Agreement
DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
SCALE 1
300'
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.. LOT, 11.
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LEGEND
RIGHTOFWAY
CENTERLINE
EXHIBIT A DEVELOPMENT
PARCELS
DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
Exhibit B
Insurance Requirements
This Exhibit B is attached to and forms part of the ENA to which it is attached. Unless otherwise
indicated, Section references in this Exhibit B are to Sections in this Exhibit B. Initially capitalized
terms used and not defined in this Exhibit B shall be defined as set forth in the ENA.
Insurance.
1.1. Required Insurance.
Without limiting the City's rights to indemnification, Developer shall procure and
maintain, or cause to be procured and maintained, at no expense to the City, and furnish or cause
to be furnished to the City, evidence of the following policies of insurance (complying with the
requirements set forth below) naming Developer as insured with respect to the coverage required
by Sections 1.1.1 and 1.1.2 below, and, with respect to the commercial general liability and
business automobile liability required pursuant to Section 1.1.1, naming the City Parties as
additional insureds. With respect to the environmental liability insurance required pursuant to
Section 1.1.3 below, Developer shall cause its subcontractor or its consultants to procure, maintain
and evidence such insurance at no expense to the City and name the City Parties as additional
insured. All insurance required below shall be obtained by the times set forth below and kept in
force until termination of the ENA, or for such longer period as is described below. Claims asserted
after termination of the ENA for incidents and occurrences during the term of the ENA shall be
covered as provided herein.
1.1.1. Commercial General and Business Automobile Liability Insurance. Prior to
entry by Developer onto the Development Parcels (which entry shall be solely pursuant to the
terms of the License), Developer shall maintain or cause to be maintained commercial general
liability insurance and business automobile liability, to protect against loss from liability imposed
by law for damages on account of personal injury, including death therefrom, suffered or alleged
to be suffered by any Person or Persons whomsoever on or about the Development Parcels, the
Project and/or the improvements and the business of Developer on the Development Parcels, and
in connection with the entry, access, inspection and/or investigative activity pursuant to the ENA
and resulting directly or indirectly from any acts or activities of Developer or anyone directly or
indirectly employed or contracted with or acting for Developer, or under its respective control or
direction, and also to protect against loss from liability imposed by law for damages to any property
of any Person occurring on or about the Development Parcels in connection with the entry, access,
inspection and/or investigative activity pursuant to the ENA, caused directly or indirectly by or
from acts or activities of Developer or any Person acting for Developer, or under its control or
direction. Such insurance shall also provide for and protect the City against incurring any legal
cost in defending Claims for alleged loss, with defense counsel approved by Developers' or
Developers' contractors' insurer(s), which approval may not be unreasonably withheld.
1.1.1.1. Minimum Requirements. Developer's policies of
commercial general liability and business automobile liability insurance shall be "occurrence"
based policies and shall be maintained in full force and effect at all times until termination of the
ENA. The amount of insurance required under commercial general liability is limits of Ten Million
Tustin Irvine Company ENA 5.14.24 Exhibit B Tustin/Irvine Company
Page 1 of 4 Exclusive Negotiating Agreement
DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
Dollars ($10,000,000.00) each occurrence and in the aggregate, and business automobile liability
with limits of Four Million Dollars ($4,000,000.00) combined single limit each accident.
Developer's subcontractors and consultants shall maintain policies of commercial general liability
and business automobile liability insurance "occurrence" based policies that shall be in full force
and effect at all times when subcontractor and consultant is performing any work or inspections
on or about the Development Parcels with commercial general liability limits of One Million
Dollars ($1,000,000.00) each occurrence and Two Million Dollars ($2,000,000.00) aggregate limit
and business automobile liability with limits of One Hundred Thousand ($100,000.00) combined
single limit each accident. The commercial general liability and business automotive liability
insurance shall be issued by a company permitted by the Insurance Department of the State and
rated A-NII or better, by the latest edition of AM Best's Key Rating Guide. Such insurance may
be provided by a combination of underlying commercial general liability and business automobile
liability, self-insurance, and an umbrella or excess liability insurance policy otherwise meeting the
requirements of this Section 1. Developer will provide to the City a copy of Developer's umbrella
policy's schedule of underlying insurance showing Developer's commercial general liability and
automobile liability policies (all other information will be redacted).
1.1.1.2. Evidence of Insurance and Required Endorsements. An
ACORD certificate evidencing the foregoing and providing the following endorsements approved
by the authorized representative of the underwriter and reasonably approved by the City shall be
delivered prior to entry by Developer and annually (upon request from the City) evidencing
renewals of each policy until termination of the ENA. The underlying commercial general liability
and business automobile liability policies shall be endorsed as follows: (a) include the City Parties
as additional insureds; (b) the insurance coverage shall be primary, and not require contribution of
any insurance or self-insurance maintained by the City, and (c) a waiver of subrogation for the
benefit of the City Parties. The procuring of such insurance and the delivery of certificates and
omnibus or blanket additional insured endorsements evidencing the same shall not be construed
as a limitation of Developer's obligation to indemnify the City Parties as set forth in the ENA. No
umbrella or excess endorsements will be required as long as Developer provided to the City a copy
of Developer's umbrella policy's schedule of underlying insurance showing Developer's
commercial general liability and automobile liability policies (all other information will be
redacted).
1.1.2. Workers' Compensation Insurance. Prior to entry by Developer onto the
Development Parcels (which entry shall be solely pursuant to the terms of the License), Developer
shall obtain, and thereafter maintain or cause to be maintained, workers' compensation insurance
issued by a responsible carrier authorized under the laws of the State to insure employers against
liability for compensation under the workers' compensation laws now in force in California, or
any laws hereafter enacted as an amendment or supplement thereto or in lieu thereof. Such
workers' compensation insurance shall cover all Persons employed by Developer in connection
with the Project and shall cover liability within statutory limits for compensation under any such
act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any Person
employed by Developer incurring or suffering injury or death in connection with the Project or the
operation thereof by Developer. Notwithstanding the foregoing, Developer may, in compliance
with the laws of the State and in lieu of maintaining such insurance, self -insure for workers'
compensation in which event Developer shall deliver to the City evidence that such self-insurance
has been approved by the appropriate State authorities. Each such insurance policy, and each
Tustin Irvine Company ENA 5.14.24 Exhibit B Tustin/Irvine Company
Page 2 of 4 Exclusive Negotiating Agreement
DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
renewal or replacement thereof, by endorsement approved by an authorized representative of the
underwriter, shall contain a waiver of rights of subrogation against the City Parties.
1.1.2.1. Contractor and Subcontractor Worker's Compensation
Insurance. Prior to entry on to the Development Parcels or otherwise pursuant to the ENA by each
contractor and subcontractor, Developer shall cause to be furnished to the City evidence
satisfactory to the City that such contractor and subcontractor involved in performance of work on
the Development Parcels or otherwise pursuant to the ENA maintains workers' compensation
insurance in compliance with all applicable State laws. Each such insurance policy, and each
renewal or replacement thereof, by endorsement approved by an authorized representative of the
underwriter, shall contain a waiver of rights of subrogation against the City Parties.
1.1.2.2. The insurance required by Sections 1.1.2 and 1.1.2.1 shall be
issued by a company rated A-NII or better by the latest edition of AM Best's Key Rating Guide,
or by the State Compensation Fund.
1.1.3. Environmental Insurance. Prior to any invasive testing by Developer upon
the Development Parcels (which shall be solely pursuant to the terms of the License), Developer
shall obtain, or cause Developer's environmental consultant or contractor to obtain, and shall
thereafter maintain or cause to be maintained environmental and pollution legal liability insurance
coverage in connection with the investigative activity of Developer on the Development Parcels
pursuant to the ENA and, including coverage for loss, remediation expense and legal defense
expenses, and naming each of Developer and City Parties as additional insureds to address
pollution risks at the Development Parcels. Such policy shall include coverage for pollution legal
liability conditions to the extent that the conditions are created or exacerbated by the activities or
work of environmental consultant or contractor on or about the Development Parcels.
Such policy shall comply with the following requirements:
(a) The policy shall be written by the insurance company selected by,
or reasonably approved by Developer, and approved by the City, which approval shall not be
unreasonably withheld, and which insurer(s) shall have a AM Best's rating of A-NII or better;
(b) The policy shall provide Five Million Dollars ($5,000,000) in
coverage each occurrence or claim and in the aggregate, subject to a maximum Seven Hundred
Fifty Thousand Dollars ($750,000.00) deductible or such other deductible amount approved by the
City and include a claim reporting period of not less than three (3) years from the initial date of
access to the Development Parcels pursuant to the License granted in Section 4.5.1 of the ENA.
Such claim reporting period requirement can be met either (a) by renewing the policy annually up
to three (3) years if the policy is occurrence based or (b) by obtaining an extended reporting period.
Such claim reporting period shall survive expiration or termination of the ENA;
(c) The policy shall be paid for in full or financed under a payment plan.
The policy shall contain a waiver of right of subrogation against the City and shall contain a notice
of cancellation endorsement in favor of the City Parties which shall require written notice to the
City by the insurer at least seven (7) days prior to the effective date of cancellation. An
endorsement that provides the insurer "will endeavor to" provide the required notice, or similar
Tustin Irvine Company ENA 5.14.24 Exhibit B Tustin/Irvine Company
Page 3 of 4 Exclusive Negotiating Agreement
DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
non -committal language, is not sufficient. As such, Developer's (or Developer's environmental
consultant or contractor's) obligation to maintain or cause the maintenance of the environmental
insurance pursuant to this Section 1.1.3 shall survive the termination of the ENA for the term
required for such insurance policy pursuant to Section I.1.3(bl, and
The DDA will further address the requirements for indemnity and insurance
coverage for environmental and pollution legal liability. The provisions of this Section 1.1.3 shall
survive the termination of the ENA for the period set forth in Section 1.1.3(bl.
1.2. General Insurance Requirements.
1.2.1. For all policies or certificates, the insurer endorsements (or a copy of the
policy binder, if applicable) shall identify the ENA in the description section and shall provide
evidence that either (a) the primary insured has paid for its premium in full for any policy that is
currently in place, or (b) that said insurance shall not be cancelled except if the City is given thirty
(30) calendar days advance written notice of any cancellation, except ten (10) day notice shall be
provided for cancellation or termination due to non-payment of premium.
1.2.2. All insurance provided under this Section 1 shall be for the benefit of the
City Parties and any additional parties that Developer may require. Developer agrees to timely
pay, or cause to be paid, all premiums for such Developer's insurance and, at no cost or expense
to the City, to comply and secure compliance with all insurance requirements necessary for the
maintenance of such insurance. Developer agrees to submit all required certificates and
endorsements evidencing the insurance required under this Exhibit B to the City prior to its entry
onto the Development Parcels. Except as provided in Section 1.2.2.1 below, between seven (7) to
thirty (3) calendar days before the expiration of any such policy, certificates and endorsements
evidencing renewal policies shall be submitted to the City.
1.2.2.1. In the event that endorsements are not available at the time
of initial renewal, the City will accept written confirmation of coverage ordered on behalf of
Developer by their agent/broker on agent/broker letterhead, followed by carrier -issued
endorsements within ninety (90) calendar days.
1.2.3. If Developer or its contractors or subcontractors or consultants fail or refuse
to procure and maintain insurance as required by the ENA, the City shall have the right, at the
City's election, to suspend Developer's License to access the Development Parcels.
Tustin Irvine Company ENA 5.14.24 Exhibit B Tustin/Irvine Company
Page 4 of 4 Exclusive Negotiating Agreement
DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
Exhibit C
Environmental Documents
1. Department of Navy "Final Environmental Baseline Survey" dated March 2001
2. Finding of Suitability to Transfer for Southern Parcels 4-8, 10-12, 14, and 42 and Parcels 25, 26,
30-33, 37, and Portions of 40 and 41 Marine Corps Air Station Tustin, California dated
September 28, 2001.
3. Agreement Between The United States of America and The City of Tustin, California for the
Conveyance of a Portion of the Former Marine Corps Air Station Tustin dated May 13, 2002
4. Quitclaim Deed D and Environmental Restriction Pursuant to Civil Code Section 1471 dated May
13, 2002
5. Geotechnical Report of Observation and Testing during Rough Grading, "Neighborhood D"
Phases I and II, Disposition Area 8, 2C and a Portion of 213, Tustin Legacy, City of Tustin,
California dated September 26, 2014.
6. Final Site Assessment and Soil Removal Action Report Tustin Neighborhood D-South, Areas 1
and 2 Total Petroleum Hydrocarbon Impacts Former Marine Corps Air Station Tustin, Tustin,
California dated September 2018.
7. Determination of No Further Action for Petroleum Release at Neighborhood D South at Former
Marine Corps Air Station Tustin, Orange County, California dated September 10, 2018.
8. Final Summary Report for Per -and Polyfluoroalkyl Substances Presence/Absence Sampling in
Groundwater in Carve -Outs 5 and 6 dated November 2018.
9. Per- and Polyfluoroalkyl Substances (PFAS) Investigation Report Neighborhood D South Former
Marine Corps Air Station Tustin dates August 30, 2019.
10. Final Summary Report Additional Assessment of Per and Polyfluoroalkyl Substances in
Groundwater in Carve -Outs 2, 5, 6, and 9, and Groundwater and Surface Water Near Operable
Unit 3 (Phase 1) Former Marine Corps Air Station Tustin dated June 2020.
11. Final Summary Report Additional Assessment of Per and Polyfluoroalkyl Substances in
Groundwater in Carve -Outs 2, 5, 6, and 9, and Groundwater and Surface Water Near Operable
Unit 3 (Phase 2) Former Marine Corps Air Station Tustin dated October 2020.
12. Final Fourth CERCLA Five Year Review Report, Operable Units 1A, 1B North, 1B South, 3, and
4B Former Marine Corps Air Station Tustin dated October 2021.
13. Final Preliminary Assessment/Site Inspection Report, Basewide Investigation of Per- and
Polyfluoroalkyl Substances, Former Marine Corps Air Station Tustin dated December 2021.
14. Revised Final Preliminary Assessment/Site Inspection Report Basewide Investigation of Per- and
Polyfluoroalkyl Substances dated August 2022.
Tustin Irvine Company ENA 5.14.24 Exhibit C Tustin/Irvine Company
Page 1 of 2 Exclusive Negotiating Agreement
DocuSign Envelope ID: 7726F8EF-2C13-4CB1-9D64-FC08B5E5F748
15. Navy North Hangar Fire that began on November 7, 2023. Information and resources can be
found at https://www.tustinca.org/1457/North-Hangar-Fire-Resource-Pag
16. Final Work Plan Remedial Investigation of Per- and Polyfluoroalkyl Substances dated January
2024.
Tustin Irvine Company ENA 5.14.24 Exhibit C Tustin/Irvine Company
Page 2 of 2 Exclusive Negotiating Agreement